BRUSSELS EU antitrust regulators opened an investigation on Friday into the proposed merger of Finnish paper producer Ahlstrom AHL1V.HE and a unit of Swedish company Munksjo, worried that the new entity would have too much market power.
Ahlstrom said in April it would spin off its label and processing business unit which would then combine with privately-held Munksjo. Private equity firm EQT is the biggest owner of Sweden's Munksjo.
The European Commission said a preliminary investigation indicated potential competition concerns in the markets of pre-impregnated paper and abrasive paper backings as the merged company would dominate both European and global markets.
"This proposed merger in the paper industry would remove a competitor from some markets which are already highly concentrated," EU Competition Commissioner Joaquin Almunia said in a statement.
The EU competition authority will decide by April 29 whether to approve the deal.
(Reporting by Foo Yun Chee; Editing by John O'Donnell)